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Wolfsburg, 11 September 2011 – The review of the partnership with Suzuki Motor Corp announced by Volkswagen Aktiengesellschaft has brought its first results. Volkswagen stated in Wolfsburg on Sunday that the company is serving notice of an infringement by Suzuki of the cooperation agreement concluded in December 2009.

The notice concerning the infringement relates to the supply of diesel engines produced by another manufacturer to Suzuki. Volkswagen takes the view that this contradicts the terms of the cooperation agreement. Suzuki has now been given a period of several weeks to remedy the infringement. Volkswagen considers this step regrettable, but necessary, and has offered to discuss the matter with Suzuki. At the same time, the company stresses it still regards Suzuki as an attractive investment.

Volkswagen acquired 19.9 percent of the shares in the Japanese manufacturer in December 2009 under a strategic cooperation. In its half-yearly financial report published in July 2011, Volkswagen noted that the partnership is developing more slowly than expected and announced a review. This review has not yet been finalized.

BERLIN — Volkswagen AG said Suzuki Motor Corp. broke the rules of the two carmakers’ contract agreement by agreeing to purchase engines from Fiat S.p.A.
“Suzuki has now been given a period of several weeks to remedy the infringement,” VW said in a statement today. “Volkswagen considers this step regrettable, but necessary, and has offered to discuss the matter with Suzuki.”
VW and Suzuki have been at odds since March when VW said in its annual report that it could “significantly influence financial and operating policy decisions” at Suzuki, describing the Japanese company as an “associate.”
Suzuki in June decided in to buy diesel motors from Italy’s Fiat for cars built in Hungary.

A spokeswoman for Volkswagen said the step does not mean the end of the partnership and that the company is still very much interested in continuing the alliance. “We will have to see now how Suzuki reacts and then we will discuss the next steps to be taken,” she told Reuters.
Osamu Suzuki, chairman of Suzuki, said in a Bloomberg interview published Sept. 6 that the two companies weren’t speaking.
The public feud has brought to a halt VW’s efforts to turn a 222.5 billion-yen ($2.9 billion) investment into an operational alliance. The partnership was meant to combine Suzuki’s leading position in India, Asia’s second-fastest growing major economy, with Volkswagen’s global reach as the world’s third-biggest carmaker.
When the deal was signed in December 2009, with VW taking a 20 percent Suzuki stake, the companies said they intended to cooperate on technology, including hybrids and electric cars, and expansion in emerging markets. Almost two years later, no joint projects have begun.
VW, which forecasts deliveries will rise 5 percent this year after selling 7.2 million vehicles in 2010, aims to surpass Toyota Motor Corp. and General Motors Co. as the world’s largest carmaker by 2018 and is targeting India as an expanding market to boost sales.
Suzuki, which sold 2.64 million cars in its last fiscal year, delivered 1.13 million of those vehicles in India. VW sold 53,300 cars in the country in 2010.
Osamu Suzuki hasn’t found any VW technologies he’d like to adopt following an extensive review of what they have to offer, he wrote in a Nikkei newspaper column in July. Suzuki in July also said the automaker was open to forming alliances with others.
In a recent interview with Automotive News Europe, VW CEO Martin Winterkorn said VW has taken a break in the partnership with Suzuki. “The crux of the matter is the cooperation between two very different cultures. At the moment, we have taken a timeout. Nonetheless, we will hold onto our shares,” he said.